Why do we have this thing called a “financial crisis”? Why have we had such a crisis periodically ever since the United States was created? What changes occur or what happens each time to bring on the crisis? Do we forget how to make things that people need? Do the factories burn down? Are our tools lost? Do the blueprints disappear? Do we run out of people to work in the factories and offices? Are all the services that people need for a happy life so well taken care of that there’s hardly any more need for the services? In other words: What changes take place in the real world to cause the crisis? Nothing, necessarily. The crisis is usually caused by changes inthe make-believe world of financial capitalism.

All these grown men playing their boys’ games. They create an assortment of financial entities, documents, and packages that go by names like hedge funds, derivatives, collateralized debt obligations, index funds, credit default swaps, structured investment vehicles, subprime mortgages, and dozens of other exotic monetary vehicles. They create all manner of commercial pieces of paper, of no known real or inherent value, backed up by few if any standards. Then they sell these various pieces of paper to the public and to each other. They slice and dice mortgages into arcane and risky instruments, then bundle them together, and sell the packages to those higher up in the pyramid scheme. And some of those engaged in this Wild West buying and selling become millionaires. Some become billionaires. They get Christmas bonuses greater than what most Americans earn the entire year. Is all this not remarkable?

And much of the buying is not done with the buyer’s own money, but with borrowed funds; “leveraged”, they call it. The pieces of paper sometimes represent commodities, but the actual commodities are not seen, may not even exist; if the seller demanded the buyer’s own funds, or the buyer wanted to see the goods, the whole transaction would freeze. They sell “long”, expecting the price to rise; they sell “short”, expecting the price to fall; they sell “naked short”, which means they neither possess nor own what they’re selling; a name for each gimmick. They take ever-greater risks buying and selling increasingly-esoteric pieces of paper. It’s a glorified Las Vegas, casino capitalism.

These pieces of paper can be so complex that many of those buying and selling them do not fully understand them; no problem, they just resell the pieces of paper to someone else at a higher price, even when one or both parties know that the paper, while pretending to be payable debt, is virtually worthless. The government, even when it tries to moderately regulate this Monopoly board, can at times also be confused by the complexities of the pieces of paper, compounded by the less-than-transparent practices that envelop the transactions; a potpourri including speculation, manipulation, fraud. Billionaire financier Warren Buffett has called the pieces of paper “weapons of mass financial destruction.”

The boys of finance have been playing their games for years, and so at each stage of the process there are insurance policies allowing the players to hedge their bets; they insure, and they re-insure; hopefully covering themselves against the many risks of the game, often knowing that they’re trading in questionable debts; the giant corporation AIG, a major player in the insurance game, has just been taken over by the federal government. And with each transaction, at each level, someone earns a commission or a fee. There are also other firms whose purpose in life is to go around rating various players and their pieces of paper and their credit worthiness and giving seals of approval which are relied upon by investors. Some of these rating firms, we’re now learning, have been surprisingly incompetent, when not simply dishonest

President Roosevelt, confronted in the 1930s with similar players, called them “banksters”.

It’s all built on faith, as fragile as the religious kind, the belief that something is worth something because it comes with a piece of paper with reassuring words and numbers written on it, because it’s traded, rated, and insured, because someone will sell it and someone will buy it. The same market psychology, the same herd mentality, that went into constructing this house of cards built on pillars of greed can cause the house to collapse in a heap. But the Monopoly players keep their bonuses, and bow out with multimillion-dollar golden parachutes; while tent cities are springing up all over America.

Is this any way to run a society of human beings?

And the government is in the process of trying to bail out these reckless traders, these parasites, rescuing them and their system from their own nonsense. With our money; without a major restructuring of the Alice-in-Wonderland rules of the financial games, without instituting the toughest of regulations, oversight, and transparency, and with no guarantee that the spoiled-little-brat Masters of the Universe will act in any way other than their own narrow self interest, the rest of us be damned.

Capitalism is the theory that the worst people, acting from their worst motives, will somehow produce the most good.

The public doesn’t like a blank check. They think this whole bailout idea is nuts. They see fat cats on Wall Street who have raked in zillions for years, now extorting in effect $2,000 to $5,000 from every American family to make up for their own nonfeasance, malfeasance, greed, and just plain stupidity. Wall Street’s request for a blank check comes at the same time most of the public is worried about their jobs and declining wages, and having enough money to pay for gas and food and health insurance, meet their car payments and mortgage payments, and save for their retirement and childrens’ college education. And so the public is asking: Why should Wall Street get bailed out by me when I’m getting screwed?

So if you are a member of Congress, you just might be in a position to demand from Wall Street certain conditions in return for the blank check…

1. The government (i.e. taxpayers) gets an equity stake in every Wall Street financial company proportional to the amount of bad debt that company shoves onto the public. So when and if Wall Street shares rise, taxpayers are rewarded for accepting so much risk.

2. Wall Street executives and directors of Wall Street firms relinquish their current stock options and this year’s other forms of compensation, and agree to future compensation linked to a rolling five-year average of firm profitability. Why should taxpayers feather their already amply-feathered nests?

3. All Wall Street executives immediately cease making campaign contributions to any candidate for public office in this election cycle or next, all Wall Street PACs be closed, and Wall Street lobbyists curtail their activities unless specifically asked for information by policymakers. Why should taxpayers finance Wall Street’s outsized political power – especially when that power is being exercised to get favorable terms from taxpayers?

4. Wall Street firms agree to comply with new regulations over disclosure, capital requirements, conflicts of interest, and market manipulation. The regulations will emerge in ninety days from a bi-partisan working group, to be convened immediately. After all, inadequate regulation and lack of oversight got us into this mess.

5. Wall Street agrees to give bankruptcy judges the authority to modify the terms of primary mortgages, so homeowners have a fighting chance to keep their homes. Why should distressed homeowners lose their homes when Wall Streeters receive taxpayer money that helps them keep their fancy ones?

A few weeks ago I posted on Lie of the day about the lottery being a tax on the poor. I believe there is some truth to that statement. Don’t get me wrong through, I used to buy lotto tickets now and then, but had stopped buying them because I seemed to never win anything.

It had been about a year since I bought a ticket. Well the other day I was filling my truck with gas and bought a dollar lotto ticket. In the back of my mind I was thinking that karma might help me win because karma in my case always wants to prove me wrong. Sure enough – I won. I thought to myself, hmmm, I posted some thing about the lotto screwing the poor and I win two dollars? Then I think about the old line that karma is a bitch and here at this point in my life, I have come to grips with karma by writing ‘the lotto is a scam’ post about screwing the poor out of there hard earned dollars – by winning! Well being the wild gambler that I am and knowing that karma is going to make sure I win, I decided to go all out – so I buy another two dollar ticket and as Karma would have it I win five dollars this time!

I decided to not push my karma any harder, knowing that karma was using me to take the food out of some poor child’s mouth. So I took my booty and put it in my wallet and hung my head in shame.

Do you think that Karma is real or is it just a lie we tell ourselves?

Don’t laugh. Lots of people think that instantly coming into a few million dollars means life on easy street, money that will be around forever, and no need for responsibility or work.

The truth is very rarely does it work out like that for a lottery winner. Unfortunately, a new study published in the Journal of Behavioral Decision Making finds that people who feel poor are more eager to spend money in an attempt to get rich (this is a good “duh” moment). One recent report found that families who make under $12,400 spend about $645 a year on lottery tickets.

Many poor people are fooled by what they think it means to win the lottery. It’s usually the worst thing that could ever happen to someone.

Coming into a quick pile of cash usually means that people will come out of the woodwork looking to get a piece of your pie. Third cousins whom you didn’t even know existed will call and hit you up for money. You’ll get letters in the mail from complete strangers with every sob story imaginable (unemployed, sick children, in a wheelchair, etc.) in an attempt to get sympathy points and money from you. It puts a big target on your back, and most often it takes you out, too.

When you are feeling the money crunch, the last thing you want to do is spend what little money you have on a super-long shot for money. The odds of winning a lottery are literally about 1 in 125 million.

You are 66 times more likely to die from a snake bite.

You are 2,001 times more likely to die in the electric chair!

You are 2,201 times more likely to die from a hornet, wasp or bee sting.

You are 1,488,095 times more likely to die in a car wreck on the way to the gas station to buy the lottery ticket.

Does all this sound ridiculous? GOOD! It’s supposed to sound that way! Banking on winning the lottery is about as ridiculous as it gets!

Think about this for a second. The less money you have, the more wisely you need to manage it because you don’t have as much room for error. When you make a budget and get out of debt, you have some breathing room. Your budget can get busted when an emergency comes up, but that’s why you save up an emergency fund. The ultimate is when you start investing the money you have. The reason for that is eventually your money will grow to enormous sums because of the power of compound interest.

Forget the lotto. Working hard and saving money is the only surefire way to make money. It works every time … unlike the lotto.